All Forum Posts by: Jamie Jones

Hi @Irvin Grant, for most conventional loans, the minimum down payment for a duplex is going to be 15%. Freddie Mac does have an affordable lending program called Home Possible that allows for a 5% down payment on a duplex, but your income has to be at or below 80% of the area's median income. Here is a link where you can check for your specific area: https://sf.freddiemac.com/working-with-us/affordable-lending...

@Caroline Gerardo this should really only have an impact on portfolio and jumbo financing though right? Since the majority of mortgages are sold in the secondary market, I don't see how increasing the capital requirements will impact the secondary loans. Please advise. 

For what it's worth, I am a depository mortgage banker and have seen a significant decrease in appetite from my firm for portfolio lending due to the risks of bank runs and additional scrutiny that has taken place since Silicon Valley and Signature failed. 

Great post. It really all depends on timing. If you are playing the appreciation game in the next 3-5 years, certain areas certainly could be in trouble. This is what scares me with all these syndications that have such short time horizons. 

However, if you plan to hold forever, between natural appreciation, inflation, and debt paydown it is hard to lose. Real estate is such a forgiving asset. 

Overall, I think many investors do themselves a disservice by not learning more about mortgages, banking, and lending. I personally believe in many situations how you finance a property is just as if not more important than how much you paid for it. 

If you are looking at conventional loans for the cash-out refinance, please keep in mind that there is a seasoning requirement of 12 months (this was increased from 6 months to 12 months not too long ago). So you can still get a loan to pay off a 1st lien (assuming hard money/private money/ etc.) but you cannot get an extra money back to pay yourself back if you paid cash for the renovation or down payment. 

There is an exception to this called "delayed financing" but the subject property can have no loan on it so would have to paid with cash, or have another property used as collateral. 

Schedule E on your personal tax returns is how mortgage underwriters will analyze your income. They will look at your gross rental income listed on the returns, and then add back the following expenses: depreciation, mortgage interest, insurance (if escrowed), taxes (if escrowed). If you have no owned the property long enough for it to show on your tax returns, or if the property underwent a significant renovation and was vacant, then you can provide a lease agreement, where 75% of the rent will be used as income. 

 You say she should never have bought a rental until she paid off such loans. However, my guess is she probably would have never been able to pay off the debt if she had not purchased the rental. Sounds to me like she made a very wise decision to purchase when she did, and can now compound that decision into freeing herself from that large amount of debt. I do agree that people should invest from a position of financial strength but with that amount of student debt, she likely has a decent paying job and (even with the student loans) was able to purchase an investment property in one of the country's most expensive market. That doesn't sound like a place of weakness to me. It would be different if she was talking about six figure credit card or multiple pay-day loans. 

Great job @Samantha Springs

@Denis Ponder if you are looking to get a conventional loan, here are the Fannie Mae guidelines. Rates for second homes vs. investment properties are essentially the same now, so really the only advantage is being able to put 10% down. However, if only putting 10% down, expect to pay some discount points as its pretty much impossible for most lenders to offer "par" pricing at the LTV level. Your best bet might be to try to find a portfolio lender that keeps the loans on their books - their pricing is generally much better on second homes.

 @Fallon Gilbert I'd be happy to take a look at your full scenario and see if I can help you out. As long as you qualify, we should be able to run it as a conventional loan at my company. Feel free to DM me. What market is the property in? 

@Alex Loginov make sure everything is documented and notarized. I recommend charging them a daily rent rather than accepting a seller credit, as that will incentivize them to get out quicker. For example, if market monthly rent is $2,000, charge them $67/per day, (2000/30) paid upfront for 14-21 days. Make sure it is understood that as soon as they sell the house to you, they are no longer owners but tenants. Although common sense, this is sometimes hard for sellers to grasp since it still seems like "their house". 

If the title company/lender is willing to hold part of their proceeds in escrow until they are fully moved out, that is a great option as well. Either way, just ensure there is some kind of monetary incentive for them to move as quickly possible. Be reasonable but firm with them - you don't want to get in squatter/eviction situation. 

 Hi @Joan Garcia Hernandez, yes you can. In fact, that is exactly what THDA does - they don't actually lend out the money, FHA lends the funds and THDA insures the loan. Right now, the THDA Great Choice FHA loan rate is 5.875%.

What market you are located in within Tennessee?